The product is M-Shwari. Launched in November 2012, through a strategic partnership between CBA and Safaricom (the owners of M-Pesa), it has taken the Kenyan market by storm with its banking account, a mixture of savings and loans.
Why did CBA take on this strategy? Dalal explained: "CBA has always been known to be a high net worth type of bank, we’ve been known to bank for HNWIs. We had retail products, but that was not really our market until 2011 where the new strategic objective was to expand into the mass market.
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"However, we need to not go into it the same way as our competitors did. This obvious tactic is to pump more money into it and increase your branch network. We only have 23 branches in Kenya, so we didn’t feel that would be the right thing to do."
Safaricom has over 25 million customers, approximately 20 million of which do not have a formal bank account. Most of these consumers actively used M-Pesa, but they did not receive any interest or any proper banking services. This was an opportunity for CBA.
Dalal said: "We partnered with [Safaricom] and said we would own a product and offer it to your existing customers by making use of their channel. What really happens is that the customers can access their account, accept terms and conditions, and then we automatically create a savings account.
"Once a customer chooses to register, we are integrated with the M-Pesa systems and the information is already there. We can fetch all of their information and subject them to a credit scoring and immediately determine everything within 60 seconds."
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By GlobalDataCurrently, M-Shwari has 14.6 million customers in comparison to M-Pesa’s 25 million, so Dalal considers the experiment to be a great success.
"When we launched, the first day reached 79,000 customers. We could have had more, but we didn’t expect those numbers and struggled with volume. With 40 days, we hit a million. Facebook took six months to get that," he said.
"After three years, we now have 14.6 million users and it’s growing at a rate of 11,000 customers a day. We accept about 66,000 loans per day and we’ve tried to enrich the value proposition we give to our customers. We’ve launched a similar thing in Tanzania and Uganda and, before the end of the year, we want to have launched it in Rwanda. In Tanzania, we have over four million customers. We launched in Uganda two weeks ago and we expect two million users in the first 18 months."
While this is good njews for CBA, the lender has much bigger plans in sight.
Dalal concluded: "We have an ongoing project to create a digital bank in Kenya. We honestly believe this is going to be the road map for the banks in the retail space, so now we want to own our own channel as opposed to being reliant on [Safaricom]. Our hope is to convert at least four million existing customers into the digital bank. We’ll give them a debit card in their hands, as well as a prepaid card, all connected through an app.
"We hope to launch in August and see where it takes us."
